A Local Partnership Was Considering the Possibility of Liquidation Since

question 15

Multiple Choice

A local partnership was considering the possibility of liquidation since one of the partners (Ding) was insolvent.Capital balances at that time were as follows.Profits and losses were divided on a 4:2:2:2 basis,respectively.
Ding's creditors filed a $25,000 claim against the partnership's assets.At that time,the partnership held assets reported at $360,000 and liabilities of $120,000.
If the assets could be sold for $228,000,what is the minimum amount that Ezzard's creditors would have received?

• A)$36,000.
• B)$0.
• C)$2,500.
• D)$38,250.
• E)$67,250.

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Definitions:

Legal Obligation

A duty enforced by law, requiring an entity or individual to perform or refrain from performing a certain action.

Date of Record

The date set by a corporation upon which the shareholders must be registered to be eligible to receive dividends or participate in corporate voting.

Common Stock

A type of equity security that represents ownership in a corporation, with holders having a claim on part of the company's assets and earnings.

Paid-In Capital

The amount of money that shareholders have invested in the company through the purchase of its stock, above the par value of the shares.